My wife and I spent a few days there last year. Thoroughly enjoyed it! Very relaxing and low key.
We ate at the Spring House Hotel (three and a half stars for food and four and a half stars for the outdoor seating). Three Sisters was great for lunch and we also had a nice meal at Rebecca's Seafood (grilled fresh tuna sandwhich, clam chowder, and salad).
Didn't have any food but the beer and company was good at the Mohegan Brewery. The gelato was very good at Aldo's.
There's also a very nice old movie theatre in town. Make sure to see what they're showing.